Manufacturing ERP

Our organization has about 125 employees and makes specialty clothing, outerwear, and considering a change to ERP. Because cost is a major factor, we are looking for ballpark costs high / low either per user or for outright software purchase for accounting software and inventory management in particular. This will help us know where to start. If you reply, please be realistic so that I can present to management. We estimate 10-20 users if that matters. In the case of web software, the annual renewal would also be of interest. Thanks.

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Without know a single thing about how you folks operate I'll just give up the goods. I work for a national Microsoft Dynamics reseller. The licensing, depending on what version you'd ultimately need would be around $2,250 to 4,000 per concurrent user. Concurrent just means how many people would be on at the same time. So if of the 10-20 users you mention let's say only 8 would be using at the same time you'd need 8 licenses, if all 20 would be on at the same time,?you'd need 20. As I'm sure the group will tell you though the license cost is the tip of the iceberg.?Depending on your requirements you might pay as much or more on?implementation services and/or infrastructure to run the system if you haven't invested in anything already.

My advice would be to talk to someone local who represents the systems you'd be interested in. I know nobody likes to talk to sales people but?ultimately their job is to do just what you're asking -?give you a quote on roughly what you need.

If you're interested in the Microsoft Dynamics line drop me a note and I can put you in touch with someone near you.

One option you may want to consider - being sensitive to your costs is OpenERP www.openerp.com. The license costs in your situation would be $0 - as it follows a true open source model. The Database is Open source as well and it can be deployed on Linux, Windows, or Mac OS.

Currently there are about 500 modules available and about 10-15 new modules added each month. We have product variant modules that handle any Sizing and Color Classifications. You can run the system off the web client or desktop client - no additional charge for the web client. There is also no additional charge for any of the following capabilities:
HR = $0
CRM = $0
Customer/Supplier Portal = $0
Attendance/Timekeeping = $0
Analytic Accounting = $0
eCommerce Integration with Magento = $0

You would have all the source code with this solution - and the ecosystem of developers numbers around 650 globally. We also like the built in workflow to improve management of your processes.

Annual Maintenance Costs covering a classification of the certified modules are below (note: this is not per person - this is pricing for the # of tiered users on maintenance):
<10 users = $1800/yr (which includes unlimited bugs migration support)
<25 users = $3800/yr
etc

Let me know if we can help you further explore this path as an option - but it certainly may help you on your license costs. Implementation costs can vary - and often depends on the how much work your team wants to do/versus ourselves or another partner's team.

If you have 11 minutes there is a nice overview on our website in the learn section.

Absolutely untrue. Whether a piece of software is vulnerable to
"hacking" is dependent upon the quality of the software, not the
license under which it is released. Some may argue that Open Source
software is, actually, less vulnerable as there are more eyes on it
which ensure its quality and some may argue that, because the source
is available to all, hackers may study it to find areas which are
vulnerable to attack. I would argue that, unless we're talking about
a specific software, both arguments are equally glib.

Bill,
Cost is a starting point, not an ending point or a sole consideration. Assume there is a need. If a product - no matter how great - is in $750k vs. $150k range then we know which framework is closer to our capacity to manage.
GE

I'd also agree that you need to really think about the requirements of your system, and the reason you are changing. Is there a particular reason? As Bill mentioned, when you care mostly about cost, you more than likely won't find what you're looking for. It would be better to keep your current system for another year or two, and put together a proper budget so that you can get a system that will stay with the company for the long hall. That being said, it wouldn't hurt to start doing your research now. If you could provide some additional details about what you are looking for, it will be much easier to match you with a few systems that would work for you.

George,
Good to hear that price is not the sole criteria. So with that said, most of the mid-tier software providers will work with you go establish a solution that meets your price point (there is typically give and take on both sides). For example if your price point is the $150k, you may give in by going closer to the 10 versus 20 users, or not including Advanced Planning & Scheduling (but only traditional MRP); while they might provide extra users or discounts. In today's market you can typically find a win - win decision for everyone. So define your requirements, find the solutions that meet those requirements, and then work together to craft a contract that works for everyone.
Bill

I firmly agree with your mindset of always wanting to attempt to properly secure your infrastructure and IT applications on all levels which includes creation and execution of a current risk policy. That I believe goes without saying – and is a foundational principle.

A good resource on this topic you may want to investigate is a recent Security Now podcast #245 found here http://www.grc.com/sn/sn-245.pdf. (See page 15 specifically) It examines the comparative security of open versus closed source and development software, and open versus closed execution platforms.

To quote Steve Gibson at GRC.com “ . . . looking at the code and development methodology side, I’m not at all clear that open source code is inherently more or less – either way – secure than closed source code. I don’t see anything other than personal policy bias, or commercial interest, to recommend one over the other from a security standpoint, based upon all of the history we have with the demonstrated security arising from either approach.”

Frankly, vulnerabilities exist in all software. What you’re really trying to do is control and manage your risk in the best possible way within given budgets. Keeping users from clicking on links in emails is a good start.

OpenERP is Open Source (GPLv3 and AGPL)– which means the software is available to use under open source licensing. So if you want to download/use/modify the original source code you are free to. I think you can find good examples of both commercial and open source software being hacked and hackable – and which one is better at closing the holes is always debatable (e.g. Mozilla vs IE, Apache vs. IIS, etc). Most threats to a corporate environment are actually internally driven, and if you can keep your users from clicking on links in emails – that will help control your greatest threat :-).

Being “Open Source” does not mean that everybody and the kitchen sink can “compromise” the source code by freely publishing to the downloadable source code. OpenERP certified modules are managed and reviewed by the development team at OpenERP sa – which means that prior to code being added to the “stable” code stream it undergoes several reviews – which is designed to look at multiple areas – security being one – just like many commercial software environments. Some would say you have to be more aware of security with this approach. Avoiding the “wild-wild-west” environment with some control helps to reduce vulnerabilities – most open source software at some level has an editor trying to guide the software.

Fortunately, for OpenERP you could also look to leverage security minded enhancements such as multi-factor authentication with One-Time-Passwords using the Yubikey as well.

Hopefully, you'll find this informational.

On the topic of cost . . . if your existing system is a constraint and you can't achieve competitiveness or operational efficiency - then the cost of doing nothing may be quite high. We believe companies should always look to improve and enhance their capabilities if it makes business sense.

>Bill,
>Cost is a starting point, not an ending point or a sole
>consideration. Assume there is a need. If a product - no matter how
>great - is in $750k vs. $150k range then we know which framework is
>closer to our capacity to manage.
>GE

Here's what the issue is George - there are systems out there for
your number of users that will cost $5000, including setup and
installation. There are also ones for $1.5 million and more.
In many cases there can be little or no difference between those
systems.

Everyone understands the need to be able to afford the solution.
However, the price of the solution is most greatly affected by
the needs it fulfills. Without knowing those needs, the price
range of the system is so vastly different you will not be able
to get an answer that will help.

Cost is not a starting point - at least when it comes to software
solutions. Cost varies so greatly, the question of affordability
only comes in when you know what systems you're looking at that
will do the job.

Not to worry though, everyone understands the need to go to
management and establish a budget. If the software doesn't
help you do that, switch thinking and look at your business.
How much would it mean to you if you could solve the issues
of wasted products, and inefficient manufacturing? If you're
wasting $100k on that a year, and figured you might be able
to get your money back in 3 years, then you could spend
$150k if your waste was cut in half. Then you can work
to see if you can find a solution to those problems for
that budget.

Otherwise it's not like buying a car. There are no set
of big/medium/small classifications with a narrow range
of what each class costs. Software regularly varies by
1000% to 10000% for literally the same thing. And there
is no such thing as a "class" of software with a neat
range. All that boils down to there is no such thing as an
"average" price.

A point about an Open Source system. While the code to utilize it is free, that doesn't mean you could bring in a new ERP system for free. The software cost is but one component to a new system. With an Open ERP, you will need to make many customizations to the system, all of which will be very expensive. Further more, you will be version locked then as well. Since you would have made many customizations to the system, and the source code itself, you would end up losing all of those if you ever wanted to do an upgrade. Not to mention the support you would have to provide for your system. If you are in the $75K-$150K price range, i believe Bill is right. You should talk with some tier 2 companies and see what would fit. You can view a White Paper on the Top 10 ERP Providers online, and allow each of them to explain in more detail why they would be the best fit for your company, as well as then could give you a better idea on pricing. I personally work for Epicor, which doe
s specialize in working with Mid-Market companies, and i'd be happy to discuss our product with you. Shoot me a message and we can talk.

OpenERP is completely open source, and so is Open Bravo. It does not mean it is hackable because it is open source, contrary to that, open source are among the most stable and reliable.

I have personally developed/customized and deployed on very huge corporates, who had severe reservations but after some credible results, they accepted my proposals and after customization, they deployed it.

There are lot of business, technical and operational matters you will have to sort out before these things could be discussed.

Excellent points, as usual Geoff. I would just like to add to Geoff's comments that you "look at the business".

The ERP System will not manage the business. People manage the business based upon HOW they deploy the ERP System. Some ERP Systems will prove an aide or a hindrance in assisting people to manage the business.

? Inventory turns will not automatically increase by using a new ERP System. Inventory turns increase or decrease based on how people manage demand and supply.
? Customer service will not automatically increase by using a new ERP System. Customer service increases when shipments leave a plant on time, with the proper quality considerations and with the proper Customer quantities. Those activities are directly attributable to the managing of the shop floor, supply and demand, and quality concerns managed by people.

Odds are if you do not have acceptable inventory turns, or if you are not meeting customer expectations, new software will not "FIX" those problems.

A Microsoft partner gave me a ballpark of $10k - $15k per user including implementation for a product called NAV. In order to assist in establishing a budget, this is precisely the information I needed. Inventory and imports management, accounting A/P & A/R, EDI, CRM, warehouse management are key issues for us. Since we have no ERP at the moment, we will also be looking for a consulting firm to help manage the process. We expect to pay a minimum of $150k for these features. If we can incorporate production into the process to maximize the use of our physical resources, that may also be considered. Industry expertise in our business will also be considered. -GE

Hi George: Maybe you could check with members of whatever industry organization applies to you and find out what is working for members your size and situation. Clothing/Textiles has some unique needs. Just because a solution fits the budget doesn't mean it will work in your environment.

If you have no ERP system what so ever, then you may actually be in better shape that a company that is migrating from an old system to something new. As you look around and talk to different vendors, most of them will tell you that thier system was developed with your problem in mind. Even the best one for your situation will need adjusting for some particular process. Be ready to modify your business processes. Get yourself a great team together to steer the company through the upcoming changes. Depending on how big you are, certain systems make more sense. If you are heavly involve internationally, a smaller set of solotions will fit your bill. Have a "Go Live Date" in mind. If the Jan 1 is what you are looking at, you have a bunch of work infront of you to do in a short amount of time. It is do able. This budget item is a fair amount of money that Management is investing, success is the only goal that is acceptable. You have to have HIGH confidence be
fore you start, if you don't have that feeling in your gut, don't sign the contract.

George,
As an ERP Var and implementer, Syspro can defiantly get you under that number. I have installed and worked with NAV also.
Syspro offers modular purchases so you can both tailor you needs for today and scale and grow for your business tomorrow without needed to change ERP in the next 5-10 years
SolutionsX and Syspro STARS methodology are proven in the industry to get implementation costs below .75 per software costs; other ERP providers are 1.0 to 1.25.

Again, SolutionsX is an international consulting firm specializing in ERP selection, implementation and integration to 3rd party systems.

Which ever ERP vendor is selected, one gets locked in it - so pin pointing towards open source specifically is not a good answer.
Also, open source ERP consultant (lets talk specifically about OpenERP) are much cheaper than most "TOP 10 ERP Providers". Also, there are specific consultancy firms who offer from conception to post-sale support service at "reasonable" costs.

With regard to upgrades or anything otherwise, the beauty about open source is that, one can hire a dedicated in-house resource on reasonable costs and do all work internally, or hire consultancy firms' services - at much better cost than that of TOP tier -and get the upgrades done.

Open source will free you from any type of restriction - number of licenses or per workstation/server per year, kind of stuff, until and unless you outsource completely to service provider for commercialized version.

Will you be interested in my solution if:
1.I can show you complete demo of your Industry.
2.I can give you customer(s) reference where my solution reduces 30 % operational cost and 15% communication cost?
3.It is fully web enabled and developed on .Net technology (which reduce capital investment in computer hardware)
4.Both license options available
a.SaaS
b.Service License
5.If migration option is available from SaaS to Server license or Server license to SaaS.
6.If companies having turnover between $1 million to $10 billion using the same software.
7.If solution can works for multiple companies, multiple currency and from ‘n’ number of geographical distributed locations.
8.It is Cost effective.
9.It can customize as per client requirements
10.If it cover
a.Financial Accounting System
i.Fixed asset & depreciation Accounting
b.Inventory Management System
i.Material Requirement & Planning (MRP -1)
ii.Production scheduling & monitoring
iii.Planned maintenance
iv.Tools & Equipments Management
c.Purchase and Sales management
d.Customer Relation Management
e.After Sales Services
f.Payroll Management
g.Business Process Modeling with Work Flow (with document management system)
11.Have business intelligence and dashboards, which are which are a single location for all the information pertaining to a customer, vendor, or job function. Financial ratios tell you where the business function performance is within the allowed range. SDBS aids in making good business decisions.

I would disagree with that. You don't get version locked into every system. If the system is built upon SOA, like the Epicor solution, you never lose your customizations, because you never touch the source code, like you would with an open solution

Respectfully, SOA does not work like that. True, you don't touch the
source code, but the services can and will change as the vendor updates
their program. I suppose that's not an issue if the vendor doesn't plan
on ever increasing the functionality of their program, but one could
argue that is a completely different kind of problem. As the exposed
properties or methods of the service change over time (and they
certainly will), then code that leverages the SOA object will break.
SOA is a nice model, but it's not magic - version updates will still
break custom extensions when schema changes are propagated to exposed
properties and exposed method parameters.

I actually thought the list sounded pretty good. I'm not sure even SAP could say it could do all that. Well, say it and actually execute on it for less than a few?million dollars that is. My question is why would a small US company bet the business on a relatively unknown, in the US that is, software application. SD sounds great but who do you know who runs it and are there any references that could speak to deployment and support on the continental US? I guess that's the difficulty with taking these things global is you have to get that first prospect to make the leap of faith.

That is true, but serious schema changes, beyond additional fields for new functionality occur. Not saying never, but you are virtually guaranteed effort needed to upgrade source code, where as unless they completely redesign existing modules, you upgrades should be a lot easier.

No solution is 100% upgrade proof unless the vendor does very little to improve the product.

We sell and support Dynamics NAV, B1 and Sage MAS90 & 200. There are a million systems like this one described. Some sold via the internet at 50% to 75% less than a 'name brand' solution. Some might actually work, but unless you can get substantial local references implemented by a local team, you'll probably get what you paid for in terms of quality, implementation and support.

An ERP system is the heart of your business. If you needed a heart transplant, would you shop for the cheapest or best doctor?

True, but still the SDK doesn't touch the 'source' code. Similar to the approach SAP has with B1. I was amazed at how fast most ISV's were in moving their solutions from SAP 2007 to SAP 8.8. From my experience with older 'source code change' systems, these types of projects take a whole lot more time and involve a lot more headache.

Actually it is a good list, my point is in the Tier 2 ERP sector, at least the products I implement, that is really a standard list.
I can provide that list for 2-3k per user depending on software product.

Most SOA software that we implement is version independent and with over 30 clients that have moved through 3 or 4 versions, we have not had too many issues with personalization, as long as you stay inside the Software's Guidelines for development.

My point exactly. Because HMO's are the cheapest health plans, they pay doctors the least. It's up to the Doctor as to whether they will accept their reimbursement rates. If you are a world renowned heart surgeon and can charge $250k for a transplant (just making it up, have no clue) with a full schedule for the next 6 months, why would you take a patient for the $50k the HMO would pay you. (Morals and ethics aside since in ERP nobody's life is on the line)

You have put it very well. The purpose of getting any system should be to help improve your processes in terms of efficiency and cost. Anything short is money down the drain.

Some of the concerns you raise about Open Source are valid. Not in the sense that they are justified but in the sense that they must be addressed. My company, Alliance Technologies, has been developing customized ERP solutions for large organizations in Kenya. Open Source was initially a hard sell as the risk of acquiring software that has not been widely proven is great.

We have been fortunate to implement an Open Source ERP system for Kenya Revenue Authority, the biggest in East and Central Africa with over 4000 users. We have implemented an ERP for the Department of Defense which as well is the largest such organizations in the entire continent handling more than 1 million stock items. We are currently testing an implementation at the Kenya Medical Supplies Agency, one of the biggest medical supplies distributorships in the region with more than $140 million in stocks every year.

These implementations were not cheap. They took a fair share of qualified skill to customize to the unique needs of our clients. However, proprietary solutions would have cost four times what they did! Additionally, Open Source has no annual license liability and the total cost of ownership is therefore greatly reduced.

I would love to hear some of the needs you have and see how we can be of help in finding you a fitting solution. Lets discuss how best to meet your business needs and your fears for Open source will be no more.

>You have put it very well. The purpose of getting any system should
>be to help improve your processes in terms of efficiency and cost.
>Anything short is money down the drain.

Correct. Perfect agreement, the business drives the need which the
system should provide a solution to.

>Some of the concerns you raise about Open Source are valid. Not in
>the sense that they are justified but in the sense that they must be addressed.

Yes, I also agree with this. All it means is everyone has to do due
diligence. It has nothing to do with Open Source, it has everything
to do with making sure you understand the benefits, the risks, the
pluses, the minuses, etc.

Good so far.

>These implementations were not cheap. They took a fair share of
>qualified skill to customize to the unique needs of our clients.
>However, proprietary solutions would have cost four times what they
>did! Additionally, Open Source has no annual license liability and
>the total cost of ownership is therefore greatly reduced.

But I want to specifically and publicly deny endorsing that type of
situation. There are two very large issues. One is the fit to
the business. Since it was open source that was used, then the
"not cheap" can only come from the amount of services required.
The breadth and amount of customization sounds like the fit
to the business was not there from the start. I specifically
was endorsing that fit, and saying it is required no matter what
type of licensing model is involved. It just has nothing to
do with Open Source. Or not Open Source.

Second large issue is the amount of customization discussed
makes the statement incorrect about the cost of a proprietary
solution. Because the customization is where all the money
was spent, the license fee probably pales by comparison.
In addition, since it's really about the fit to the business,
it's entirely possible a proprietary system, well selected
to require little customization, can have an annual maintenance
fee (that's *not* on going license costs, it's maintenance)
that is less than the huge expense of on going customization
on a product with an audience of one.

Open Source or proprietary neither confirms nor denies anything
said. Too much customization does how ever deny a proper fit
to the business.

I would only like to clarify on your two issues. You mention fitness to business and level of customization. Our specific experience has been that prospective clients invited tenders in which we participated. Building our A1 ERP on Adempiere, we compete with Oracle, SAP and Dynamics based on the clients requirements.

The requirements are broad both business process and technical requirements. We have seen that our competitors based on proprietary ERP solutions will quote three or four times what we quote.

I agree that if a ready solution is found, Open Source or not, it would greatly reduce the cost of ownership given the reduced amount of customization. Unfortunately, or fortunately for us, there has not been a ready solution to fit ALL the requirements of our clients. This is where we have come in to design, develop and implement the solutions as desired.

For us at Alliance Technologies, we believe that the client deserves to know what his money will be spent on and determine whether given equal total cost, he/she would rather spend it on increasing usefulness of the system or in acquiring licenses for a system that one would not be certain as to fitness for purpose.

Martin,
The problem with going into an account with the thought of customizing to "increase usefulness of the system" is that everyone winds up with a one off. Additionally, when a new system is deployed people are asking for customizations based on the "tools" they have used in the past. Most companies really don't have enough experience in implementing systems to even know the right questions to ask, let alone what the right answers are. An implementation should really call for business process optimization, not for the customizing of features. Their money would be better spent learning to streamline the business versus writing code.
Bill

We have found that it is always best to base our advisory services on best practice. Some of our clients however are governed by certain legal procedures and processes for which there is no work around. Custom solutions in such a case I believe cannot be avoided.

Martin,
If there are specific requirements driven by governments, regulatory agencies, etc., then there are vertical applications that are targeted to those verticals and have the software to support it as standard features. You only need to customize if your solution doesn't fit. If that is the case, you should be looking at verticals that the solution supports more closely.
Bill